Here's an interesting MarketWatch update:
Berkshire gets antitrust OK to add to Burlington stake - MarketWatch
Apparently the FTC had to approve Berkshire's intent to continue acquiring shares of Burlington, so Berkshire had to submit filings that are made public. Part of the filing was the disclosure that BRK has acquired BNI call options at an average cost of $38.62/share with a strike price of $40. The options are for a total of 7.5M shares and can be executed on 3 Oct.
I don't know the fine details of how options are executed, but I'm assuming that means BRK could buy BNI shares for $78.62 when they're currently trading at around $82. Is that the total cost or am I missing commissions & other fees?
Who would be putting 7.5M shares on the street? Would that be created by Burlington (thus diluting the rest of the shareholders) or did some institution get snookered into making this deal with their pension-fund holdings? Even for Buffett & Simpson this seems to be a bit of an aggressive trading strategy, but I'm wondering if this is an extra-credit project that's going to boost one of Buffett's wunderkind protégés ahead of his fellow CFO competitors.
You would think that a 7.5M share trade, on its own or through a market-maker, would drive the market share price down to the trade's share price. Does the promulgation of this info mean that arbs would be tempted to drive down BNI's price in advance of the 3 Oct option execution? How does this news affect trading strategies?
I'm really looking forward to BRK's November quarterly shareholder report!
Berkshire gets antitrust OK to add to Burlington stake - MarketWatch
Apparently the FTC had to approve Berkshire's intent to continue acquiring shares of Burlington, so Berkshire had to submit filings that are made public. Part of the filing was the disclosure that BRK has acquired BNI call options at an average cost of $38.62/share with a strike price of $40. The options are for a total of 7.5M shares and can be executed on 3 Oct.
I don't know the fine details of how options are executed, but I'm assuming that means BRK could buy BNI shares for $78.62 when they're currently trading at around $82. Is that the total cost or am I missing commissions & other fees?
Who would be putting 7.5M shares on the street? Would that be created by Burlington (thus diluting the rest of the shareholders) or did some institution get snookered into making this deal with their pension-fund holdings? Even for Buffett & Simpson this seems to be a bit of an aggressive trading strategy, but I'm wondering if this is an extra-credit project that's going to boost one of Buffett's wunderkind protégés ahead of his fellow CFO competitors.
You would think that a 7.5M share trade, on its own or through a market-maker, would drive the market share price down to the trade's share price. Does the promulgation of this info mean that arbs would be tempted to drive down BNI's price in advance of the 3 Oct option execution? How does this news affect trading strategies?
I'm really looking forward to BRK's November quarterly shareholder report!